The American Small Business League is predicting that the Obama administration will try to use the momentum from the fiscal cliff debate to justify plans to dismantle the Small Business Administration.

President Obama recently announced plans to essentially dismantle the SBA by combining it with the Department of Commerce. The administration claims this will save $3 billion over the next 10 years, which is infinitesimal when you compare it to the $56 billion the government has proposed to spend on foreign aid in 2013.

The ASBL believes large federal contractors from the defense and aerospace industry want the SBA closed to avoid prosecution under section 16 (d) of the Small Business Act, which holds a punishment of up to 10 years in prison and a $500,000 fine. Since 2003, a series of federal investigations have found large businesses have hijacked billions of dollars in federal small business contracts.

According to U.S. Census Bureau data, small businesses create more than 90 percent of all net new jobs. They are responsible for half of the private sector workforce, more than half of the GDP, and more than 90 percent of all U.S. exporters are small businesses.

The ASBL predicts that if the SBA is rolled into the Department of Commerce, within a matter of five years, the SBA’s programs will essentially be eliminated and the individual staff at the SBA will slowly be phased out.

“This is an old Washington trick,” said ASBL President Lloyd Chapman. “Every body in Washington knows that combining the SBA with the Department of Commerce is just a scam to direct 100 percent of federal contract dollars to large corporations. This is the last thing we need to do in the middle of the worst economic downturn in 80 years.  Eliminating federal programs for America’s chief job creators would be economic suicide. If President Obama were serious about cutting the deficit and stimulating the economy, he would triple the SBA’s budget and supercharge every federal program for the nation’s 28 million small businesses. “

###